Editor's Note: Are you in the market for new equipment? Read these tips first. They were written by Dirck Holscher, editor of the Larry Hunt newsletters, and this article first appeared there. I highly recommend these newsletters for anyone who needs to stay up to date on imaging equipment trends: http://larryhunt.com/
By Dirck Holscher
Keeping total equipment costs under control is vital to running a profitable operation. Paying too much for equipment and service can put you at a serious competitive disadvantage. Here are some ideas on how to save serious money on your next machine purchase by avoiding five big mistakes. The list price is only the starting point. Your final deal may be 50 percent or more off the list price. But there are many other factors that help make a good deal a great deal. You have to take a close look at service contracts, financing options, and dealer and vendor reliability in order to get the best deal possible.
1. Deciding exactly what machine you want — and not considering any other options.
You need to carefully research all possible machine options. You may discover a machine that meets your needs but that you weren’t familiar with. Your research provides a frame of reference to determine different machines’ capabilities and price points. You’ll want to review survey results and field reports in newsletters, then check with us to see if there is something new on the market that you may want to consider. We spend a lot of time at trade shows and reviewing vendor literature in order to save you time.
Talk to several machine vendors, even if you aren’t certain that you’re interested in their equipment. You might learn something interesting. It’s also a good idea to request a proposal from several dealers selling the machine that you decide to focus on. Most major markets have a manufacturer’s branch office, and several independent dealers as well. Pricing can vary dramatically from dealer to dealer, so be sure to check with several.
Make sure to inquire about rebates, specials, promotions, “manager’s funds,” etc. Also check to see whether free clicks or an extended warranty is available. There are often funds available to close a deal, but they are not always offered on the first or second quote.
2. Concentrating on the machine price, figuring there isn’t much you can do about service pricing.
In fact, you need to shop service pricing just as carefully as machine pricing. Click charges can add a great deal to the total cost of ownership of the machine. A difference of just one-half cent ($.005) per click for 40,000 color prints equals $200 per month. Take a careful look at the service contract. Try to get a guaranteed-service response time written into your contract, with a discount on your next month’s service payment if the response-time standards aren’t met.
Consider fixed (or “frozen”) service pricing for a term of years, such as a rate fixed for the term of your lease. You’ll pay more per month for service, but you can save in the long run. Make sure that oversize copies (e.g., 11” x 17”) are counted as one click. Most printers run a substantial portion of their work two-up to save on click charges.
3. Considering only the monthly payment and not worrying about the pricing and financing details.
Shop the cost of credit carefully. Machine vendors tend to focus on the monthly payment, making it difficult to determine exactly how much you are paying for the machine and how much the charge for credit is. This approach makes it difficult to shop for credit separately from a bank or credit union. Consider bank financing as well as leasing. If you decide to lease, look at third-party lease financing as well as leasing from the vendor’s captive leasing company. Consider using cash reserves for some or all of your payment, since interest paid on cash deposits is very low right now.
4. Spreading your payments over the longest term possible.
Finance for the minimum number of months possible, since technology is changing more and more rapidly. Also, lease rates for shorter terms are often lower. We generally recommend a 48- month or shorter lease term if at all possible.
Consider both fair market value (FMV) and $1.00 buyout leases. Be clear about the differences between these two types of leases, and the advantages and disadvantages of each. Check with your accountant about them. In addition, determining fair market value at the end of a lease can be difficult. There is a good discussion “Negotiating a Good Fair Market Value Buyout,” in the July 2010 issue of Color Copy News.
5. Buying the “latest and greatest” before your old lease has been paid off.
You may be approached by a dealer several months before your current lease is up with a great way to get the “latest and greatest with no additional monthly payment.” If you do so, you’ll likely end up paying the remaining payment on your old machine as well as the payments on the new machine. The remaining lease payment on your current machine is baked into the new lease amount. It is rarely to your advantage to trade in a machine before the lease expires.
In summary, be sure to allow plenty of time to negotiate the best deal on your new equipment. Allow enough time to fully research machine options and discuss pricing with dealers. Take your time. Be patient. Don’t let the vendor rush you to a decision. And don’t forget that we’re here to help you get the best possible deal on your new equipment.
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Copyright 2015 by Larry Hunt Publications. No part of this report may be copied or reproduced in any form without the express written consent of Larry Hunt Publications. Material presented in this publication is based on the best information available but cannot be guaranteed for completeness or accuracy. To subscribe, contact Larry Hunt Publications, P. O. Box 1269, Berryville, VA 22611 - (540) 336-3360, fax - (888) 345-3860, email: dirck@larryhunt.com, website: www.larryhunt.com